Hedge Funds Tiger Global and Melvin Swooned Last Month With Rate Hikes Looming

(Bloomberg) -- Tiger Global Management and Melvin Capital Management underperformed the broader equity markets in January as rising inflation and the specter of Federal Reserve rate hikes battered growth stocks.

Chase Coleman's Tiger Global, which managed $100 billion across public and private markets at year-end, logged a 14.8% decline for its hedge fund, and Gabe Plotkin's $11.7 billion Melvin Capital slumped 15%, according to people familiar with the matter.

By comparison, the tech-heavy Nasdaq Composite Index dropped 9% in January, while the S&P 500 slid 5.3%. Equity hedge funds had piled into high-growth, high-valuation stocks, pushing their exposure to at least a two-decade high late last year, according to prime brokers.

As markets tumbled last month, hedge funds rushed to cut leverage, but the move came too late for many. In the first two weeks of 2022, such firms pared leverage at the fastest pace since April 2020, client data compiled by Goldman Sachs Group Inc. showed.

January's rout followed a disappointing 2021 for Tiger Global and Melvin, which both lost money even as the Nasdaq and S&P 500 reached new peaks. Meanwhile, Alex Sacerdote's Whale Rock Capital Management recorded a 15.9% drop last month for its hedge fund in a share class that owns stakes in private and public companies, one person said.

Other funds that focus on growth stocks managed to avoid much of the carnage. Coatue Management's main equity hedge fund tumbled 4.3% last month, while Viking Global Investors' stock-picking hedge fund sank 4.5%, according to people familiar with the matter.